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Bonds 205: TIGRs, CATS, and LIONs

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1.
Even though felines were issued by private firms, they were still relatively secure bonds.
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True. Even though they were issued by private firms, these bonds were based on Treasury securities held in escrow.
2.
CATS were securities issued by the US Treasury and sold by brokerage firms.
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False. CATS were securities issued by brokerage firms based on Treasury bonds that they purchased and placed in escrow.
3.
The units that Treasury-backed zeros are based on represent _______.
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Interest. Interest payments were divided into units as the basis of Treasury-backed zeros.
4.
Compared to its face value, the issuing price of a zero coupon bond is _______.
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Much lower. Zero coupons are issued at deep discounts from their face values.
5.
Coupon-stripping consists of separating a bond's interest from its _______.
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Principal. Coupon stripping consists of separating a bond's interest from its principal and issuing securities based on each of them separately.